The ball’s in WA’s court

The troubled, $500 million Arena development in Perth has come under another cloud, after the West Australian Treasury warned that work on the landmark venue had slowed.

The 14,000-seat, taxpayer-funded indoor site – the future home of the Hopman Cup tennis tournament – is being built by billionaire
Len Buckeridge
’s company BGC, Australia’s largest home builder.

But bungled design changes initiated by the WA government have led to blowouts in cost and time.

The stadium was originally scheduled to cost $160 million and to be completed in time for the 2009 Hopman Cup.

It is now tipped to cost $483 million and is unlikely to be ready before May 2012 – six months later than estimated recently by WA Auditor-General
Colin Murphy
.

The final bill could reach $536 million, with BGC lodging a claim for $53 million in extra costs incurred partly because of the design delays.

In its latest annual report on the state’s finances, WA Treasury foreshadowed yet another delay to the inner-city project, which had been envisaged as Perth’s answer to Federation Square in Melbourne.

“[Venue owner] West Australian Sports Centre Trust spent $53 million less than expected last financial year, due mainly to slower than expected construction work on the Perth Arena project," the Treasury report said.

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It gave no further details of why work had slowed, and BGC did not return calls by The Australian Financial Review. But a Treasury spokesman confirmed the reduced spending was consistent with a completion date of May 2012.

The revelations could signal further disputes between BGC and the WA government.

Mr Buckeridge, who has disparagingly referred to the Arena’s design as looking like “a squashed beer can", faces penalties of $45,000 a day under BGC’s contract if the project is not finished by July 2011.

He may have an exit clause, however, given that early this year, Mr Murphy criticised the former Labor government’s handling of the project and the contract.

Escalating fit-out costs are not included in the contract, and a low estimate for the underground car park has been flagged as potentially leaving the state government with an open-ended liability.